Lynda Loxton
AS the provinces gear up to grant much- sought-after casino licences, Safren is hoping that it will not be left out on a limb with its massive investments in casinos in the former homelands.
Chairman Buddy Hawton admitted to shareholders at the group’s annual general meeting this week that uncertainty about the future of casino licences was one of the major issues facing the group this year.
Safren’s Sun International owns casinos such as Marula Sun, Sun City, Wild Coast Sun and the Carousel and will have to stand in line with other aspirant casino operators as and when the nine provinces start dishing out the 40 gambling licences that will be granted countrywide.
Hawton said that his group, through subsidiary Sun International, had provided in-depth information to provincial and national governments about the pros and cons of allowing its existing operations to continue running, possibly in partnership with black empowerment groups.
“This is certainly where a great deal of uncertainty hangs around in our business,” Hawton said.
Most provinces were still deciding how to apply the new legislation on gambling and whether they would tax gambling profits.
“We have perhaps been the forerunner in working with central and provincial governments in trying to get some rational and sensible application of the legislation,” he said.
But it was clear that Safren would not be able to hold on to all its operations. Hawton said Safren wanted to apply for one or two licences in the Western Cape, preferably on the Peninsula, and one outside Durban.
“We will have to look at the Gauteng market very carefully. We are in negotiations with central government and we are having discussions with the Gauteng legislature in regard to the way that these licences could or should be allocated that would endeavour to minimise the impact on existing infrastructure. It isn’t an easy problem.”
He said the allocation of licences was being co-ordinated by Minister of Trade and Industry Alec Erwin, who is expected to have another meeting with provincial MECs in January.
Hawton said he hoped the information that had been provided “will be recognised by the respective authorities. The problem that we have is that we have no guarantee.”
He predicted that another potentially contentious issue could be whether or not the former homeland development corporations should retain their investments in existing casinos.
According to legislation passed earlier this year, they have to sell their stakes in the casinos but Hawton said that several provinces, mainly the North-West and the Eastern Cape, believed “there is no good reason why they would have to divest their interests … I am not sure we have seen the last of that, despite the fact that the legislation has been enacted.
“They are very uneasy that they have got to dispose of their shares when there is an overhang in the market which is depressing the price of their shareholding.”
Hawton said that partly because of the uncertainty in the casino market, Safren was concentrating on its overseas investments and operations in order to offset possible losses. These included hotels, casinos, cinema chains and shipping.
He said that the “global side of the business will continue to play quite a significant part in our expansion programme.
“Not that we are forgetting South Africa. It is just that in some of our businesses we are fairly substantial and therefore the opportunities become more limited.”